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Marketing Plan for Wal-Mart - Assignment Example

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This assignment "Marketing Plan for Wal-Mart" discusses Walmart that has had to reposition itself, which is why it was not affected by the general recession in the West (Haigh, 2008). At the same time, reducing the number of products can have an adverse effect on sales…
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Marketing Plan for Wal-Mart
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Marketing Plan for Wal-Mart Introduction 1 Marketing Plan In the corporate world, a product is only as good as the awareness it commands. For a product to be successful, it should be marketed well. Nowadays, consumers have shorter attention spans and the ability to recollect a particular product is lesser. If there is no demand for a product, other functions like finance, human resource etc. will not make much of an effect (Kotler & Keller 2009, p 4). To market the product well, a route map should be available. A marketing plan should evaluate the resources of the organisation and the environment in which it functions (Saunders et al 2007, p 29). It is a yardstick to measure the effectiveness of the marketing conducted for a product in an organisation. 1.2 Briefly about the company In this report, we take the case of Walmart to illustrate a marketing plan. Wal-Mart Stores Inc. is a US multinational giant. It owns department stores and warehouse stores and goes by the brand name ‘Walmart’. According to the Fortune Global 500 list of 2013, it is the worlds second largest public company. It employs over two million employees, more than any other private employer in the world. Walmart, the world’s largest retailer is controlled by the Walton family, who own a 48 percent share in it (Troy April 21, 2011). Started in 1962, it has around 8,500 stores spread out in 15 countries. 1.3 Structure of the report Any aspect of management in general, and marketing in particular, would be vast and exhaustive. Hence, we restrict ourselves to four focus areas viz. current marketing techniques, brand reputation, global networking and future expansion opportunities. These four areas are explained briefly and followed by four marketing tools. The areas are then explained with reference to Walmart, using each of the marketing tools. A critical evaluation from the report writer’s perspective is given at every stage. To conclude, an assessment of areas other than those related to marketing is provided followed by a general marketing evaluation and the road ahead for Walmart. 1.4 Current Marketing Techniques Walmart’s uniqueness stems from the fact that it is the retailer that offers products at discounted rates. The purpose was to sell products at low prices for higher volume at lower profit margin. Lower cost suppliers were the primary reason for passing the savings in the prices. Walmart employed various strategies for marketing itself. It took over existing companies within the US and abroad. Simultaneously, it opened several stores all over the US and the rest of the world to enhance its presence; and of late it has ventured into the premium retail segment to give competition to existing players there (Associated Press MSN. March 23, 2006). “Walmart is diversified both in its product line and in the local markets its stores serve” (Besanko et al 2010, p175). 1. 5. Brand Reputation Walmart’s grocery branding consists of two parts, viz. Sam’s Choice, a retail brand in food and other hard goods, and Great Value, a labelling of goods manufactured and packaged by other companies for Walmart. Equate is a brand for pharmaceutical, beauty and health care products. Mainstays is a brand in the home furniture segment (Walmart. Equate Brand Products). The Ol’ Roy brand focuses on dog food and Special Kitty on cat food, whereas Dr. Thunder is a soft drink brand. Parent’s Choice specialises in infant products. White Stag is a brand for women’s clothing. George is a brand for formal clothing. Besides, there are several other brands in clothing, home and other products. 1. 6. Global Networking Walmart has always focused on highlighting products manufactured by others and marketed by its outlets. About 40 per cent of its products are sold in this manner. For instance, many generic drugs made by Cipla and Ranbaxy in India are sold at a much discounted rate by Walmart. Subway products are featured in the fast food outlets under the Walmart stores. Sam’s Club is a wholesale venture which works on an annual membership basis, which works as a supplier to small businesses. Walmart joined hands with Bharti Enterprises to open retail stores in India (Ray Nov 27, 2006). It also has joint ventures in China and majority-owned subsidiaries the world over. 1. 7. Future Expansion Opportunities Though Walmart had setbacks in Germany (Besanko et al 2010, p. 321) and South Korea, the opportunities for expansion are immense. Europe (excluding England) is a market to be tapped. It is slowly trying to make its presence felt in smaller countries across the world. Given the success of its low price model, this can be replicated in the poorer countries of the world. The growing affluence of Asia is a case in point. What would work in Walmart’s favour is the vast global network that it has built up so far. Walmart requires a well-communicated and benevolent image to demolish whatever resistance it faces in newer markets. Labour issues are also to be sorted out given the large number of employees with diverse demands. Walmart should leverage its positives keeping recession and impending competition in mind. As long as it has its pulse on consumer preferences and works accordingly, it can ward off all threats that come its way. 1.8 Marketing Tools used The following marketing tools are used along with the four focus areas. They evaluate the effectiveness of strategies of companies. SWOT Analysis studies Strengths, Weaknesses, Opportunities and Threats that are internal or external to a company. Porter’s 5 Forces include Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution and Threat of New Entry. These forces explain the competitive power in a business situation. Ansoff Matrix consists of Market Penetration, Market Development, Product Development, and Diversification. These are based on new and existing products and markets. Miles’ & Snow’s Four Strategic Types of companies comprise Defender, Prospector, Analyser and Reactor, which are based on entrepreneurial, engineering and administrative problems that a company deals with. 1. 9. Critical Evaluation The report writer strives to be as impersonal and impartial as possible with regard to Walmart. While the contents are put in perspective, no attempt is made to sound apologetic or to be patronising in any way. The various focus areas look at Walmart from various angles. The four marketing tools used lend various shades to each focus area discussed. The overarching focus remains marketing with reference to Walmart. The other management functions are presented in brief towards the end. 2. Detailed Explanation 2.1 Current Marketing Techniques 2.1.1 Description Walmart has three divisions viz. Walmart Stores U.S., Sams Club, and Walmart International. There are nine retail formats in which it operates viz. supercenters (which includes the online retailer, walmart.com), food and drugs, general merchandise stores, bodegas, cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants. Walmart Market bridges the gap between discount store and supercenters. Walmart opened ‘Supermercado de Walmart’ to attract the Hispanics in the United States (Schwartz & Maestri Jul 8, 2009). Walmart Express is meant for smaller towns with lesser capacity or larger cities with less space. Walmart has made its presence felt in Canada, the UK and Brazil by acquiring existing outlets. 2.1.2 Marketing Tools with respect to Current Marketing Techniques SWOT Analysis stands for Strengths, Weaknesses, Opportunities and Threats (Community Tool Box). The strengths and weaknesses of Walmart are internal to itself, whereas the opportunities and threats faced are external to it. Selling products at a lower rate with a higher volume which is a ‘strength’ can become a threat if other retail companies follow suit. All areas where Walmart does not have a presence become its opportunities. The variety it adds to the retail business is a ‘strength’ since others cannot easily offer it. Any refusal to foray into new markets can be seen as a weakness on the part of Walmart. Walmart is represented by each cell of the Ansoff matrix (The Times 100). For existing markets and products, Walmart penetrates the market by increasing its market share. For existing products and new markets, Walmart should develop the markets. For an existing market and new product, it should develop the products. Where both the product and market are new it should diversify. Porter’s Five Forces work as follows. Between the supplier and the buyer, Walmart submits the power to the buyer. It is not affected by competitor rivalry, given the scale of operations and the variety offered. There is no threat of substituting Walmart does not arise due to the same reason. Same is the case with the threat of new entrants in the field. Regarding the four strategic types of Miles and Snow, Walmart addresses all three problems of this marketing tool (Barnat, n.d.). However, Walmart can be a defender or a prospector or an analyser depending on the type of market and product available. 2.1.3 Critical Evaluation As of the present, Walmart has the means to respond. However, with advances in technology, new contenders may suddenly spring up. Labour is not a serious issue at Walmart’s but this may not be the case forever. All outstanding issues should be sorted out so that the smooth functioning of Walmart is not affected. Walmart should be proactive and open more outlets in places where it does not have any presence. In case of Porter’s five forces, a situation with few buyers may lead to control by buyers, for instance, in the case of Sam’s Choice. Walmart is not a ‘reactor’ in the case of the four strategic types of Miles and Snow. It should never be in a situation where it cannot influence the course of business at any outlet. Similarly, being an ‘analyser’ means less risks and a small range of products, neither of which is a characteristic of Walmart. 2.2 Brand Reputation 2.2.1 Description The major brands of Walmart are in the grocery segment, which go by the name Sam’s Choice and Great Value. These have high visibility i.e. they are the flagship brands of Walmart. However, Walmart does not rest on its laurels and has diversified into different areas viz. medicine, animal food, apparel lines, home furniture etc. Many of the brands taken over by Walmart from other companies have retained their names based on expediency and popularity. However, some products have also been renamed by Walmart. Brand logos and slogans have been changed over time to give the brands a contemporary look and feel. Given the popularity of various brands, the recall value is better. At the same time Walmart has phased out non-moving brands. 2.2.2 Marketing Tools with respect to Brand Reputation The popular brands would be the ones that form the strengths of Walmart. Slow moving brands would be its weaknesses. The opportunities would lie in rebranding slower and less visible brands. From the point of view of Porter’s Five Forces, the grocery brands are well-entrenched in terms of buyer power. Competition from rival brands is removed by means of the competitive pricing. New entrants are few at present and do not pose an immediate threat. The brands of Sam’s Club are favourable to Walmart and do not dictate terms to Walmart in case of Supplier Power. In case of Ansoff’s Matrix, the popular brands can be employed for market penetration i.e. for existing markets and products, on the one hand, and for market development for existing products and new markets. New brands would be needed in case of new products for existing markets. Same would be the case for new products in new markets. As far as Miles’ and Snow’s Four Strategic Types are concerned, Walmart’s brands would be defenders and prospectors. Analysers and reactor do not fit into the scheme of things in relation to Walmart since analysers avoid risks and reactors have no control over their external environment. 2.2.3 Critical Evaluation Walmart has tried to keep its brands current. However, when faced with a similar environment (low price model), it has only faced stiff competition. Germany is a good example for this. Brand recall is the greatest advantage on the side of Walmart. Hence, it can propagate this throughout the world. In case of acquisitions of other companies, the decision to leave brand names unchanged could be a deliberate decision. One possible reason could be the already positive image prevalent for the said brand. However, at times, a brand name would have to be changed to bring it in line with a set of products grouped together. Where collaborations exist, the views of the partner too play a role in fixing the brand name. Original names have been retained or local names are given in case of hostility towards or resistance to a foreign or multinational company. Like goodwill, brand equity cannot be accurately calculated in monetary terms, but definitely adds to the value of the company. 2.3 Global Networking 2.3.1 Description At the local level, Sam’s Choice is a brand name for drinks produced by Cott Beverages exclusively for Walmart. Unlike other retail stores, Walmart does not charge manufacturers a slotting fee for displaying products. The staff of Walmart can promote or take off the shelf such private label brands based on their popularity. At the global level, Walmart uses joint ventures to enter new markets. The subsidiaries are therefore partly or wholly controlled by Walmart. 2.3.2 Marketing Tools with respect to Global Networking The large scale of Walmart is a strength by itself as companies find a collaboration with Walmart attractive. However, relying wholly on joint ventures without leveraging its own competencies can be a weakness for it. The opportunity in global networking is that Walmart partners with companies which are knowledgeable about local conditions. Hence, the element of risk is reduced rather than a situation where one jumps headlong into the market. The other side of the coin contains the threat. The local partner could grow at the expense of Walmart and leave it in the lurch after it establishes itself firmly in the market. Foreign collaborations are best suited for diversification i.e. new products and markets. New products in existing markets need not necessarily entail collaborations, given Walmart’s experience with such markets. If the aim is just to increase the market share i.e. for existing products and markets, Walmart can single-handedly accomplish the task. The co-operation of a local partner would be beneficial for existing products to be launched in new markets. In case of Porter’s Five Forces Analysis, supplier and buyer power would be favourable to Walmart. Competition can be warded off to a particular extent if there is a local partner who knows the market. The threat of substitution would be less if a local partner were involved. New entrants can also be thwarted if a local partner is involved. Miles’ and Snow’s Four Strategic Types too can be implemented on Walmart with reference to Global Networking. Walmart can be a defender by joining hands with a company which together with Walmart can create synergies and help Walmart defend its territory. As a prospector, Walmart could venture into new markets, with the backup of the local partner. As an analyser, Walmart could shift the risk element to the local partner and concentrate on the new product. Walmart would never be a reactor given that it seeks control over its eternal environment. 2.3.3 Critical Evaluation Walmart would do well to seek partners when seeking new markets. A local German partner could have directed Walmart towards a better strategy in keeping with the local culture. Walmart has realised that it should modify its strategies to suit local conditions. However, one should not be overzealous in entering into a partnership. It should be used by Walmart to become acceptable and presentable to a new market. The collaboration concerned should be mutually beneficial and create synergies for the group as a whole. 2.4 Future Expansion Opportunities 2.4.1 Description Walmart has set its eyes on Russia, which has a vast population to be catered to (MSN. April 14, 2008). The logistic experience of Walmart would hold it in good stead in Russia. Expansion to Asia need not be restricted to just China and India. South-east Asia is also an affluent market waiting to be tapped. Given an Anglophile profile for Walmart (US, UK and Canada), it could also move into the Oceania belt. With Eastern Europe catching up with the Western part, there is scope for expansion in that region. 2.4.2 Marketing Tools with respect to Future Expansion Opportunities The immense experience of Walmart in different markets is the strength with which to start for Walmart. The obvious weakness would be incomplete knowledge or preparation to enter a new market. Every untapped market which is not saturated is an opportunity worth exploring. The threat would obviously be the political and cultural environment of a market. Unstable political conditions make markets unattractive at once. Future expansion calls for diversification i.e. new markets and products. Expansion could also be by means of new products in existing markets. Similarly a new market could be created for existing products. Walmart could also consolidate its market position in existing markets. With a loyal and dependable set of suppliers, this force is on the side of Walmart in case of Porter’s Five Forces. As long as Walmart caters to the buyer, there will be no shift to other competitors. Similarly, rivals can be neutralised with the vast experience on Walmart’s side. As long as Walmart keeps itself updated with latest technologies, there will be no threat of being substituted by other players. Similarly, new entrants into the market can be kept at bay. Miles’ and Snow’s Four Strategic Types is also applicable to future expansion. Walmart can defend its pre-eminent position in a mature market. It can also be a prospector and avail of new opportunities for products and markets. However, expansion requires risks to be taken and hence Walmart would be an unlikely analyser. As mentioned before, Walmart would never be a reactor. 2.4.3 Critical Evaluation If one looks at Walmart’s past history, we can say that Walmart has not been very adventurous when it comes to its business. It has moved up the ladder in a steady fashion. It has grown from the 1980’s onwards to reach the present state. A straitjacketed approach to every market has cost it some markets like Germany. There have also been instances, when it was off the Fortune 500 list. A company of its stature requires sorting out outstanding issues to reach further growth. Walmart, in its approach, is eyeing huge markets which are huge, for example, China and India. It should examine whether the markets in South East Asia are saturated or not. Similarly, all over the world, it can follow a pick and choose strategy for selecting markets to enter. Issues like labour and corruption (read unfair practices) should be amicably settled since it will have a bearing on the future expansion of Walmart. 3. Conclusion 3.1 Evaluation of non-marketing areas of company If we look at Walmart from the view point of other management functions, there are few points worth noting. First of all, Walmart is a family owned business with the final say in the company wresting with the Walton family. The organisation is the largest retailer and the second largest company in the world. A major share of the company’s revenues is generated from its retail business. It has made a success of the ‘low price, high volume’ strategy to become the leading company in this field. However, there is the criticism that small businesses have suffered due to people flocking to Walmart. The dependence on Chinese made products is also said to damage the US economy. On the human resource front, it is the largest private employer in the world. Labour unions have crossed their swords with Walmart in the past. Walmart brought its Public Relations act together to counter this criticism. However, its gesture during Hurricane Katrina was well received. 3.2. General Marketing Performance of company In general, Walmart has shown satisfactory performance in marketing. Its low prices can be attributed to superior inventory management (Besanko et al 2010, p 277). Its stores are located innovatively for the purpose of large scale merchandising (Ibid, p 375). However, much more could have been done on its part. Walmart, on its part has been cautious regarding its forays into newer markets. It has taken advantage of opportunities available in its hoe turf i.e. the US and other parts of North and South America. Nevertheless, the spirit of adventure is lacking when it comes to Europe, Asia, Africa and Australia. However, it has forayed into the luxury segment of late. It has ensured that various preferences, both in terms of product and logistics are at the disposal of consumers to give a comprehensive retail experience. 3.3. Way ahead for company Walmart has had to reposition itself, which is why it was not affected by the general recession in the West (Haigh, 2008). At the same time, reducing the number of products can have an adverse effect on sales. It should continue to explore new avenues in various parts of the world before these become saturated. It should focus more on online channels (Mc Donald 2011, p 378). Walmart, with all its resources should make an all out effort to expand its operations. A word of caution to be added is that it should not use any unfair means as this is a charge levelled against it. If Walmart were to play by the rules, the hostility towards it can be reduced to a great extent. However, it should keep abreast of technological changes for its own survival. Technology is a great leveller, since it gives an opportunity to startups with modest means to achieve commanding heights in business. If Walmart were to rest on its laurels, it would meet the same fate that many other companies before it had experienced. References Associated Press. March 23, 2006. “Wal-Mart turns attention to upscale shoppers”. MSN. [online] available at http://www.nbcnews.com/id/11957536/#.UmDl-XBaX6M [accessed 16 Oct 2013]. Barnat, R. Implementing Miles And Snows Strategies. [online] available athttp://www.strategy-implementation.24xls.com/en122 [accessed 16 Oct 2013]. Besanko, D et al. 2010. Economics of Strategy, (5th edition) John Wiley & Sons Community Tool Box. “Section 14. SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats”. [online] available at http://ctb.ku.edu/en/table-of-contents/assessment/assessing-community-needs-and-resources/swot-analysis/main#.UmDwU3BaX6M [accessed 16 Oct 2013]. Haigh, D. December 2008. ‘Cash is king’. The Marker. [online] available at http://www.themarketer.co.uk/archives/opinion/guest-columnists/brand-value-cash-is-king/ [accessed 16 Oct 2013]. Kotler, P. and Keller, K 2009. Marketing Management, (13th edition) London: Prentice Hall. MSN. April 14, 2008. ‘Wal-Mart considers move into Russia’. [online] available athttp://www.nbcnews.com/id/24112760/#.UmDxenBaX6M [accessed 16 Oct 2013]. McDonald, M 2011. Marketing plans: how to prepare them, how to use them. John Wiley & Sons. Ray. S Nov 27, 2006. “Wal-Mart to Open Hundreds of Stores in India”. The New York Times. [online] available at http://www.nytimes.com/2006/11/27/business/worldbusiness/27cnd-walmart.html?_r=0 [accessed 16 Oct 2013]. Schwartz, D & Maestri, N Jul 8, 2009. “Wal-Mart woos Hispanics with new Supermercado”. Reuters. [online] available at http://www.reuters.com/article/2009/07/08/us-walmart-supermercado-idUSTRE5676N820090708 [accessed 16 Oct 2013]. Saunders, H. G. et al 2007. Marketing Strategy and Competitive Positioning (4th Edition), London: South-Western College Pub. Troy. M April 21, 2011. “Walton family ownership reaches 48.2% level”. Retailing Today. [online] available at [accessed 16 Oct 2013]. The Times 100. Achieving growth through product development: A Portakabin case study. [online] available at http://businesscasestudies.co.uk/portakabin/achieving-growth-through-product-development/ansoffs-matrix.html#axzz2i3kFcq55 [accessed 16 Oct 2013]. Walmart. Equate Brand Products. [online] available at http://www.walmart.com/cp/Equate-Brand-Shop/1083166 [accessed 16 Oct 2013]. Read More
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